Lessons Learned:U.S.A. v. Rod Blagojevich

Reid J. ScharPartner

O i f L L dOverview of Lessons Learned• Persistence Pays Dividends

• Honesty is rarely communicated in code

• Criminal shakedowns are not always explicit “this for that”

• You can always improve when given a second chance

• Setting a tone for compliance is critical

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I ti ti f F ll 2008Investigation as of Fall 2008

Stuart Levine Antoin “Tony” Rezko

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John Wyma

W S kWyma Speaks• Blagojevich links fundraising to state action:

– Children’s Memorial Hospital– Member of the Illinois Road Builders Association

• Wyma informs Government of important meeting at Friends of Blagojevich (“FOB”) HQ on October g j ( )22, 2008

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W D Li i th S dWyma Draws a Line in the Sand• October 20, 2008 – Offsite meeting

• Wyma chooses not to record meeting

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L P i t P Di id dLesson: Persistence Pays Dividends(And The Government Does Not Give Up Easily)

• One last option: Obtain authority to plant a recording device in FOB’s offices

• Told it can’t be done

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P i t P Di id dPersistence Pays Dividends• Stay up all night writing wiretap application

• Approval received around 6 p.m.

• Early hours of October 22, 2008, FBI team covertly plants listening devices at FOB building

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FOB M tiFOB Meeting• Recording devices work

• Blagojevich makes incriminating statements

• Information from the meeting is used to quickly obtain wiretaps for Blagojevich’s home and

i fficampaign office

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Th Wi tThe Wiretaps• Wiretaps go live on October 28, 2008

• Expected to gather information on Blagojevich shaking down contributors for state actionshaking down contributors for state action

• We do capture those conversations

• BUT, the majority of what Blagojevich talks about is . . .

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S lli U S S t S tSelling a U.S. Senate Seat• Blagojevich has sole power to name a new United

States senator

• Blagojevich is clear he wants to sell the SenateBlagojevich is clear he wants to sell the Senate seat for personal benefits. Considers:– Various public sector jobsp j– Various private sector jobs– Over a million dollars in campaign contributions

• And Blagojevich is blunt

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Senate Seat as Auction Item: November 4, 2008 (Election Day)

BLAGOJEVICH: So the, you know, the trick’s gonna be how do yaconduct, indirectly, and with a certain reserve, you know, a negotiation like a sports agent here o 're pitting onea negotiation like a sports agent, where you're pitting one team against another, you know what I mean?

CHIEF OF STAFF: (UI).( )

BLAGOJEVICH: My free agent wants to play for the Cowboys, he wants to play for the Eagles. Okay. How much you offering Obama? What are you offering Madigan? You knowObama? What are you offering Madigan? You know what, we can always go to the, we can always go to the 49ers with Emil, you know what I mean? We can always end up there. Or me.

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Blagojevich’s View of Life: November 4, 2008 (ElectionBlagojevich s View of Life: November 4, 2008 (Election Day)BLAGOJEVICH: ...my upward trajectory is fucking stalled if not fucking terminally wounded, you know, by

Obama now. Okay?yDEPUTY GOV: Mm-hmm.BLAGOJEVICH: You know? For the last, better than two decade, uh, you know, decades, I've made

decisions at the expense of my family's best interests, for my political career and you, you know, my job as governor. You know?

DEPUTY GOV: YeahDEPUTY GOV: Yeah. BLAGOJEVICH: And, you know, because I'm, you know, the, this, his election blocks me now from any

immediate upward mo-, movement or, you know, maybe never have any upward movement. Then, you know, now is the time for me to put my fucking children and my wife first, for a change.

DEPUTY GOV: Mm-hmm.BLAGOJEVICH: Does that make sense Qui-, Greenlee?DEPUTY GOV: Yeah. Look I, that's how I feel strongly.BLAGOJEVICH: Yeah. You know...fuck Bill Knapp and fucking Fred, and all these fucking consultants who

I listened to at the expense of my fucking family. Okay? And then I, I started venting you know part of my vent was "yeah and what have I gotten for-? Oh theventing...you know, part of my vent was, yeah, and what have I gotten for-? Oh, the people are gonna fucking be mad and the fucking newspapers are gonna rip me for this?" Okay? "I fucking busted my ass and pissed people off and gave your grandmother a free fucking ride on a bus. Okay? I gave your fucking baby a chance to have health care. I fought every one of those assholes including every special interest out there, who can make my life easier and better, because they wanna raise taxes on you and I won't, I, I fight them and keep them from doing it. And what do I get for that? Only thirteen percent

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fight them and keep them from doing it. And what do I get for that? Only thirteen percent of you all out there think I'm doing a good job. So fuck all of you. Not to mention the fact that I'm a fucking, criminal investigations and my family's in jeopardy."

D Aft El tiDay After Election• President Obama has won. The Senate seat is

now Blagojevich’s to fill. How does he feel?

BLAGOJEVICH: I mean I, I've got this thing and it's fucking...golden.

CONSULTANT: Right.

BLAGOJEVICH: And I, I'm just not giving it up for fucking nothing.

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S t S t f H lth & H S iSenate Seat for Health & Human Services

DEMAND BENEFIT FOR STATE ACTIONDEMAND BENEFIT FOR BLAGOJEVICH

STATE ACTION

Cabinet Appointment US Senate Seat for

Valerie Jarrett

• November 6, 2008: Blagojevich Communicates His Extortionate Offer

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Extortionate Offer

N b 7 2008 Th D Aft E t ti t OffNovember 7, 2008: The Day After Extortionate Offer

BLAGOJEVICH: So she's holding Health and Human Services and I'm holding a U.S. Senate seat. Okay? She's holding hers with two hands, just kinda clinging to, you know, little pieces of it. Me, I've got the whole thing wrapped around my arms, mine, okay?

CONSULTANT: RightCONSULTANT: Right.

BLAGOJEVICH: I'm willing to trade the thing I got tightly held, to her for something she doesn't hold quite as tightly.

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Senate Seat for High-Paying Job: November 6, 2008

BLAGOJEVICH: Don't worry about it. Yeah that's, you negotiate that. I'd like a 4-year contract for a million a year orsomethin'.

PATTI BLAGOJEVICH: Yeah.

BLAGOJEVICH: Or 750 or whatever. It'd have to be good. Obama's got excess money, he just gives them more money.

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D P Bl j i h G t U tDays Pass: Blagojevich Gets Upset• Nobody will play ball with Blagojevich

• Blagojevich is not used to people saying “no” to him

• Blagojevich’s advisors are telling him to name Jarrett because it is the right thing to doright thing to do

• His response (November 10, 2008):

BLAGOJEVICH: …The whole world's passing me by and I'm stuck in this fucking job as governor now. Everybody's passing me by and I'm stuck. . . . I mean you guys are telling me I just gotta suck it up for two years and dotelling me I just gotta suck it up for two years and do nothing. Give this motherfucker, his senator. Fuck him. For nothing? Fuck him.

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Bl j i h’ Fi l Eff tBlagojevich’s Final Effort• In early December 2008, Blagojevich comes back y g j

to an offer floated to him weeks earlier (Raghu Nayak)

DEMAND BENEFIT FOR BLAGOJEVICH

STATE ACTION

$1.5 Million Campaign US Senate Seat for

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p gCash Jesse Jackson, Jr.

December 4 2008 (11:23 a m ):December 4, 2008 (11:23 a.m.): Blagojevich Speaks with Chief of Staff John Harris

HARRIS J ' t ll k h t IHARRIS: Jesse's gonna tell you, you know what, I apologize for some of the things I've done. He'll say it privately, not publicly. He'll tell you that, I shouldn't of listened to my father and some of these other advisers when it came toadvisers...when it came to...

BLAGOJEVICH: Well, he's come to me with, through third parties, you know with offers of campaign contributions and help.

HARRIS: Right.

BLAGOJEVICH: You know what I mean? 1.5 million they've, they're throwin' numbers aroundthrowin numbers around.

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• Blagojevich goes to a luncheon fundraiser and then returns home

L H t R l C i C dLesson: Honesty Rarely Comes in Code• When people will not state explicitly what they

mean or want, red flag

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December 4, 2008 (2:09 p.m.): Blagojevich Speaks with aDecember 4, 2008 (2:09 p.m.): Blagojevich Speaks with a Deputy Governor and Consultant

CONSULTANT: Is this, is essentially the deal with Jesse Jr. will be that the Jacksons will supportCONSULTANT: Is this, is essentially the deal with Jesse Jr. will be that the Jacksons will support you for re-election?

BLAGOJEVICH: No there's more to it.

CONSULTANT : What else?CO SU a e se

BLAGOJEVICH: There's tangible, concrete tangible stuff from supporters.

CONSULTANT : Like what?

BLAGOJEVICH: Well like, you know. You know what I'm talking about.

DEPUTY GOV: (UI)...later.

BLAGOJEVICH: Political tangible political support FredBLAGOJEVICH: Political, tangible political support Fred.

CONSULTANT : Okay, alright.

BLAGOJEVICH: You know. Specific amounts and everything. And while, you know, I don't know that all of that is achievable there is some of it up-front

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that all of that is achievable, there is, some of it up front.

December 4 2008 (2:43 p m ): Blagojevich Speaks withDecember 4, 2008 (2:43 p.m.): Blagojevich Speaks with his Chief Fundraiser (Robert Blagojevich)

BLAGOJEVICH: So here listen thisBLAGOJEVICH: So here, listen this...

CHIEF FUNDRAISER: Yeah.

BLAGOJEVICH: ...this whole Jesse Jr. thing, you, you gottaunderstand somethin'. I, I'm fucking elevating him now.

BLAGOJEVICH: What, here's, here's what you've got to do. You gotta talk to Raghu You gotta call him and say heygotta talk to Raghu. You gotta call him and say hey, look. You know, Jesse Jr. you know, I think a Ro-, Rod's meeting with him at some point. Very much a real-, a realistic, and you should just let him know, you know the Durbins and the others behind the scenes

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know, the Durbins and the others behind the scenes, they don't want him. They're afraid.

December 4, 2008 (2:43 p.m.): Blagojevich Speaks withDecember 4, 2008 (2:43 p.m.): Blagojevich Speaks with his Chief Fundraiser (Robert Blagojevich)

BLAGOJEVICH: And the other point, you know, all these promises of help. That's all well and good but he's had an experience with Jesse and Jesse promised to endorse him for governor and lied to him. Okay?

CHIEF FUNDRAISER M hCHIEF FUNDRAISER: Mm-hmm.

BLAGOJEVICH: So, you know, we, if, if in fact there's there's, this is, you know, this is possible, then some of the stuff's gotta start happening now.

CHIEF FUNDRAISER: Yep.p

BLAGOJEVICH: Right now.

CHIEF FUNDRAISER: Very good.

BLAGOJEVICH: And we gotta see it.BLAGOJEVICH: And we gotta see it.

CHIEF FUNDRAISER: Okay.

BLAGOJEVICH: You understand? Now you gotta be careful how you express that. And assume everybody's listening, the whole world's listening.

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December 4, 2008 (2:43 p.m.): Blagojevich Speaks withDecember 4, 2008 (2:43 p.m.): Blagojevich Speaks with his Chief Fundraiser (Robert Blagojevich)

CHIEF FUNDRAISER: Right.

BLAGOJEVICH: You hear me?

CHIEF FUNDRAISER: Right, right, right.

BLAGOJEVICH: But if there's tangible political support like you've said, start showing us now.

CHIEF FUNDRAISER: Yeah, okay.

BLAGOJEVICH Oka ?BLAGOJEVICH: Okay?

CHIEF FUNDRAISER: Very good.

BLAGOJEVICH: Ah...

CHIEF FUNDRAISER I'll k th t ll I'll k th t ll thi ftCHIEF FUNDRAISER: I'll make that call, I'll make that call this afternoon.

BLAGOJEVICH: I would do it in person. I would not do it on the phone.

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• Robert Blagojevich gets off phone and immediately sets up meeting with Raghu Nayak

D b 5 2008December 5, 2008• Downside: Article kills ability to observe potential

future crime

• Upside: Blagojevich recorded telling his brother toUpside: Blagojevich recorded telling his brother to cancel meeting with Nayak

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Lesson: Shakedowns Are Not Always ExplicitLesson: Shakedowns Are Not Always Explicit

• Children’s Memorial (“CMH”) Shakedown( )

• CMH was trying for years to get Blagojevich to raise Medicaid ratesraise Medicaid rates

• Blagojevich would not return CMH CEO Patrick Magoon’s phone calls– Blagojevich took Dusty Baker’s call– After talking to Dusty Baker, Blagojevich agreed to raise

the rates

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Child ’ M i l Sh k dChildren’s Memorial Shakedown• Timeline:

O t b 8 Bl j i h ill i t d t t “ t” M– October 8: Blagojevich will raise rates and wants to “get” Magoonfor $50,000

O t b 17 Bl j i h ll M ( ) R t ill i– October 17: Blagojevich calls Magoon: (a) Rates will increase;(b) Magoon told to keep quiet until end of year

O t b 22 Bl j i h di t hi hi f f d i t ll M– October 22: Blagojevich directs his chief fundraiser to call Magoonand ask for money

O t b 22 Chi f f d i ll M d k f f d i i– October 22: Chief fundraiser calls Magoon and asks for fundraising by end of the year

• Just 5 days between Blagojevich’s call and fundraiser’s call• “Ask” did not come from Blagojevich himself

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Child ’ M i l Sh k dChildren’s Memorial Shakedown– Magoon is concerned about the timing– Magoon seeks the advice of experienced outside white

collar counsel

• Fortunately, Magoon gets good advice—although no “explicit” quid pro quo, told to stop interacting with Blagojevich

• If Magoon had received bad advice or contacted inexperienced counsel, continued conversations might have caused problems for him

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Child ’ M i l Sh k dChildren’s Memorial Shakedown• Blagojevich gets frustrated

• November 12: Blagojevich directs a “hold” be placed on the rate increaseplaced on the rate increase

• Blagojevich ultimately convicted of this shakedown lth h “ li it” f th thalthough no “explicit” one-for-the-other

conversation

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T i l 1 (2010)Trial 1 (2010)• Trial 1 ends with conviction for lying to the FBI, but

deadlocked jury on other counts

• Most were 11 to 1 to convictMost were 11 to 1 to convict

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L Th i Al R t ILesson: There is Always Room to Improve • Could have retried the same case

• Spent time talking to jurors to see what we could do betterdo better

• Based on comments:– Cut significant detail from case– Changed from a chronological presentation to an

episodic presentationepisodic presentation

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T i l 2 (2011)Trial 2 (2011)• Focused on strongest evidence: started trial with

Senate seat allegations

• Blagojevich aware that he was saved the first timeBlagojevich aware that he was saved the first time by one juror

Bl j i h d id h ill t tif• Blagojevich decides he will testify

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Bl j i h T tifiBlagojevich Testifies• Direct Testimony

– Lasted for 5 trial days– Spent most of first day telling stories about growing up– Very calculating—Had a story for each juror:

• The Librarian • The Greek Restaurant Owner• The Video Store Owner

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Bl j i h CBlagojevich Cross• Finished direct at 4 p.m. on the day before the three-

da eekendday weekend

• Decided not to go into anything substantive about the j t f licase; just focus on lies

• The cross begins:

– “Mr. Blagojevich, you are a convicted liar, correct?”g j , y ,

– Blagojevich tried avoiding “yes” or “no” and we were off to a good start Ultimately conceded the “yes ”

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good start. Ultimately, conceded the yes.

Bl j i h C C ht i LiBlagojevich Cross: Caught in Lies• Captured on phone trying to plant a lie in the newspapers through Doug Scofield.

Schar: That was a lie.

Blagojevich: That was a misdirection play in politics. . . . It was not factual. It was not factualfactual.

Schar: By “not factual” you mean it was untrue.

Blagojevich: It was not trueBlagojevich: It was not true.

Schar: It was a lie.

Blagojevich: I don’t see it that way not thatBlagojevich: I don t see it that way, not that.

Schar: You knew the information was false.

Blagojevich: Yes

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Blagojevich: Yes . . .

Bl j i h C C ht i LiBlagojevich Cross: Caught in LiesSchar: You did not think anyone was going to contradict that y g g

lie.

Blagojevich: I don’t know. I don’t know that I thought that far ahead.

Schar: You did think that far ahead, Mr. Blagojevich, because a little bit later you talked to Mr. Harris. What you said was “Doug [Scoffield] is trying to get a [newspaper] item in saying that Jesse Jr and I had a real good conversationsaying that Jesse Jr. and I had a real good conversation this weekend.” Mr. Harris said “Did you?” You said, “No. So who’s going to contradict that, you know?”

Blagojevich: Right in other words Jesse Jackson Jr ”Blagojevich: Right, in other words, Jesse Jackson, Jr. . . .

Schar: Yes or no?

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Blagojevich: Well, I did say that.

Bl j i h C C ht i LiBlagojevich Cross: Caught in Lies• Claimed during his direct testimony he was always considering himself for the Senate seat. So . . .

Schar : You were asked, “How about yourself?” And your response was “I’m not interested in the U.S. Senate.”

Blagojevich: Right.

Schar: That was a lie.

Blagojevich: I try — what I did that —

Schar : Yes or No sir? That was a lieSchar : Yes or No sir? That was a lie.

Blagojevich : You know, I hadn’t decided what I was going to do, so I would say no, I hadn’t reached a decision. I guess, it’s — it’s a political answer but I — I can’t say that I was

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it s a political answer, but I I can t say that I was completely false. I didn’t know what I was going to do, so —

• Verdict:– Guilty of 17 of 20 counts of fraud, extortion, and bribery

• Sentence:– “When it is the governor who goes bad, the fabric of

Illinois is torn and disfigured and not easily or quickly repaired.”14 years– 14 years

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L S tti P T i C iti lLesson: Setting Proper Tone is Critical• Set a tone for compliance

– Blagojevich was not only violating the law, he iced out advisors

• Foster an environment where employees are not penalized for coming forward with concerns– The Sarbanes-Oxley Act requires publicly listed

companies to establish a whistleblower system for complaints about internal controlscomplaints about internal controls

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L S tti P T i C iti lLesson: Setting Proper Tone is Critical• It also makes good business sense:

• Many statutes incentivize employees to bring wrongdoing to the Government’s attentionwrongdoing to the Government s attention

– Dodd-Frank Act (awards 10% to 30% of $1 million plus recoveries to whistleblowers)recoveries to whistleblowers)

• Foreign Corrupt Practices Act whistleblowers are covered by Dodd-Frank recovery provisions

– False Claims Act (awards up to 30% of recovery to whistleblowers who bring suits under the Act)

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Fi l Th htFinal Thoughts• What to do when put in a difficult spot:

– Get help– Walk away

D t G R b t G l• Deputy Governor Robert Greenlee

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Thank YouThank You

Reid J. Schar

Phone: (312) 923-2629Phone: (312) 923-2629Email: rschar@jenner.com